TILT Holdings Acquires Jupiter Research in $210-Million Deal
TILT Holdings

TILT Holdings Acquires Jupiter Research in $210-Million Deal

The transaction brings a far-reaching vape manufacturer into the growing TILT portfolio.

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January 3, 2019
Eric Sandy

TILT Holdings, which owns cannabis business across the supply chain, has agreed to acquire Jupiter Research, a vaporization technology company built on “exploring the vast potential for inhalation.” The $210-million deal includes $70 million in cash and represents a major move in the cannabis technology sector.

Joel Milton, senior vice president of software and services at Cambridge, Mass.-based TILT, told Cannabis Business Times that the goal behind the Jan. 3 deal was to fill a gap in the company’s quickly growing portfolio. 

In May 2018, four companies came together to form TILT: Baker Technologies, Briteside Holdings, Sea Hunter and Sante Veritas Holdings, all blending into a vertically integrated network of cannabis businesses across 24 states. What was missing, until now, was the technology to connect with the increasing demand for innovative vape products. (“We recognize that the vaporizer category is one of the fastest growing segments,” Milton, who co-founded Baker, said.) 

To accomplish that connection, TILT executives took a close look at how market forces are changing the way the cannabis industry works within and across U.S. state lines and national borders.

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“TILT was really formed with the understanding that this industry is still very nascent, and it's growing very, very quickly,” Milton said. “Right now, what we see is many of the larger companies are what they call MSOs, multi-state operators, where they build retail stores and they have vertical operations in multiple locations. Obviously, that's necessary because of state boundaries and [the] need to set up shop in every single state you want to be in. It’s not like Canada, where you can build a million-square-foot greenhouse and service the whole country.”

While many recent acquisition headlines have involved pure market share—the buying of real estate, dispensary storefronts and greenhouse space—the TILT Holdings strategy has been based more on expanding its suite of technological innovation and access.

“What we found—and one main pieces behind TILT—is that rather than just build more and more retail stores, we think the best way to really capture a meaningful market share is to also focus on servicing the industry as a whole, taking a bit more of a b2b approach,” Milton said. “And so, whereas there are 3,000 or 4,000 dispensaries right now, owning 15 or 20 isn't going to give you meaningful market share. But servicing 1,000 of them will.”

Jupiter Research
 

This is where Baker Technologies comes in, for instance, by way of drawing an illustration of the TILT portfolio. Baker works with more than 1,000 dispensaries in 24 states to manage customer relationships through online ordering and customer retention data-tracking. That data can be used by other outfits in the TILT portfolio to further hone consumer engagement.

“Leveraging that,” Milton said, “the Blackbird acquisition that we made [in December 2018] provides the distribution arc—enabling these stores to not only understand what products are being sold in their store, but actually helping them stock their shelves and helping the brands and the wholesalers get their product to the retailers and, ultimately, to the end consumer.” 

And consumers increasingly want vape products.

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Jupiter Research was founded in Phoenix, Ariz., in 2015, and the company has quickly capitalized on ceramic CCELL technology in its vape products (for which it partners with more than 700 brands and retailers around the world). The company brought in $105 million in 2018 orders, and, as TILT Holdings executives proclaim, it’s already booked $28 million in orders for the first quarter of 2019.

The company’s president, Mark Scatterday, brought experience from the e-cigarette market to Jupiter—but he decided he’d build on what he’d learned and develop more finely tuned products for more viscous oils, like cannabis extracts. He and his team turned to ceramics for product development, eventually bringing Jupiter vape pens to market in September 2016. 

“It was a really natural fit to bring them into our ecosystem and our network of stores, where now those same Blackbird trucks that are already doing distribution can carry Jupiter pens,” Milton said. “The 1,000 dispensaries in Baker’s network can now have access to quality hardware if they want to launch their own brand of products. So, really, it’s just another step in our ecosystem.”